The Pound to Australian dollar rate has hit a 2-week low this week after hopes of a Brexit deal being agreed in the short-term have stalled.
I personally believe the drop in the value is more to do with sterling, as under usual circumstances we would expect to have seen the Aussie dollar lose value owing to the recent economic slowdown for its main trading partner, China. This week Chinese Q3 Gross Domestic Product (GDP) figures came out lower than expected, and they also showed a slowdown from the previous figures which highlights how the US sanctions on China are beginning to take effect.
The full year growth target is 6.5% and I think those of our readers hoping for a stronger Aussie dollar should be aware of these figures, as further slowing down of the economy will most likely result in a weaker Aussie dollar across the board of major currencies.
Despite GBP/AUD trading around the lowest levels in 2-weeks, the pair still remains close to the annual high, meaning that those of our clients and readers planning on exchanging Pounds to Aussie dollars are arguably in a good position when we consider historical levels.
There isn’t any economic data of significance due for release today so I expect the Brexit related comments out of the EU Summit in Brussels to continue to drive the pound’s value up until the weekend. The meeting next month has now been cancelled, and this was supposed to be the November meeting whereby the Brexit deal was supposed to be in place. EU leaders such as French President, Emmanuel Macron have stated that the UK must now put forward a suggestion to solve the Northern Irish border issue which appears to be the main issue at the moment.
The latest from UK Prime Minister, Theresa May is that she’s prepared to extend the transitional period and this has gone down badly amongst the more Hard Brexit leaning members of the Conservative Party. Should her position come into question I think there could be a sterling sell-off as the official Brexit date is now just over 4-months away.
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